What can be done to make the bidding on a second hand home more transparent

davo10

What a strange thread this is. Sealed bids? How would you feel if it turned out that your sealed bid was €30k above the next highest sealed bid? €10k deposit when bidding? That would prohibit most people from bidding on more than one property at a time.

I don't think most of you grasp this concept, the selling price is dictated by the market, not the vendor, nor the EA. if a vendor puts a property on the market at €100k, then if no one is interested in it, the property might sell for 80, if a few bidders get stuck in, it might sell for €200k, the market therefore sets the price. The advertised price is nothing more than a guess by the EA.

qrx

davo10 wrote: »

What a strange thread this is. Sealed bids? How would you feel if it turned out that your sealed bid was €30k above the next highest sealed bid? €10k deposit when bidding? That would prohibit most people from bidding on more than one property at a time.

I don't think most of you grasp this concept, the selling price is dictated by the market, not the vendor, nor the EA. if a vendor puts a property on the market at €100k, then if no one is interested in it, the property might sell for 80, if a few bidders get stuck in, it might sell for €200k, the market therefore sets the price. The advertised price is nothing more than a guess by the EA.

It's not some hair brained idea, it's how it works Scotland. You also carry out inspections etc prior to bidding, you are not taking a wild guess at the properties value, rather it is an informed bid based on the advice of professionals. Of course what you can afford and what you are willing to pay is also a factor in the equation, so if you bid 30K more it's because that's what you can afford and are willing to pay. so the market still dictates, just in a more formal and professional way.

Cows Go µ

Before I started bidding on my house I would have thought that everyone was exaggerating about there being fake bids but now I wouldn't be surprised.

I had seen a house a few months ago. It had already been on the market a few months. Before going to see it I asked if there had been any bids (it was just mentioned in passing) and the girl went and checked the file and confirmed that there was one bid a while back but way under asking price so not accepted.

When I went to view the house, I was with my mum and it was a lot smaller than it looked in the pictures and there is a lot more work needed than the pictures showed. I was talking to my mum and said we could probably bid under the asking and it might be considered. The value I said was under the asking but still way over what had previously been bid. The estate agent (different person who I had spoken to on the phone) overheard us and said that someone had already bid that and it had been rejected. Even though his colleague had previously contradicted this.

I eventually got my deposit together and my approval in principle so I put a bid in. It was under the asking but the property had been on the market ages with no interest so I thought even if they don't accept it, they might so it's worth a shot.

I heard nothing back for a week so I called to see if there was a response. The person said no update then called me back the next day to say there was another bidder. I upped my bid as I was still within budget.

Again another week drags by with no response then when I ask for an update, again the next day there is a new bid. This has happened 3 times now.

Maybe there is another bidder but the fact that it sat there for months and months with no interest and now there are 2 of us bidding and the only time the other side bids is when we ask for an update is just odd.

And I know everyone says that the market is going up so I shouldn't be expecting to get the house under asking but the house is in the back end of nowhere, it's absolutely tiny (I can only fit in it because it's just me and 2 dogs) and it needs a lot of work done as there is damp in the house. If I had bid too low and the seller didn't want to go for it that would be fine, I'd just prefer to be told that.

Graham

Cows Go µ wrote: »

Maybe there is another bidder but the fact that it sat there for months and months with no interest and now there are 2 of us bidding and the only time the other side bids is when we ask for an update is just odd.

Sounds quite plausible.

Lowball offer is put on the long finger.
You make another lowball offer.
Lowballer 1 counters.......

qrx

Graham wrote: »

Sounds quite plausible.

Lowball offer is put on the long finger.
You make another lowball offer.
Lowballer 1 counters.......

It's simple to work out. Is the EA coming back to you asking for an update when it's left on the long finger? If they are not then you can be sure they are not doing the same for lowballer 1.

Graham

qrx wrote: »

It's simple to work out. Is the EA coming back to you asking for an update when it's left on the long finger? If they are not then you can be sure they are not doing the same for lowballer 1.

I'd imagine it's generally the estate agent/seller that puts the lowball offers on the long finger.

qrx

Graham wrote: »

I'd imagine it's generally the estate agent/seller that puts the lowball offers on the long finger.

But everytime they ask for an update there is a new offer. Meaning the EA is going to lowballer 1 and asking whats the story are you still interested. A genuine bidding war would be a back and forth between both lowballers. A phony one would be one sided.

Graham

qrx wrote: »

But everytime they ask for an update there is a new offer. Meaning the EA is going to lowballer 1 and asking whats the story are you still interested. A genuine bidding war would be a back and forth between both lowballers. A phony one would be one sided.

It is quite likely that an EA/seller would allow a couple of low-ballers to drag on rather than coming out with a straight 'no', only taking action when pushed.

Cows Go µ

Cows Go µ wrote: »

Again another week drags by with no response then when I ask for an update, again the next day there is a new bid. This has happened 3 times now.

Maybe there is another bidder but the fact that it sat there for months and months with no interest and now there are 2 of us bidding and the only time the other side bids is when we ask for an update is just odd.

I realise this is difficult to do but the only course of action in a situation like this is to time limit your offer.

"I'm looking at a few properties at the moment, I can bid €XXX on this house but I'm making a decision on the 20th, so the vendor will need to accept it by then or I'll be buying elsewhere".

I am not for a moment saying this is guaranteed to work but if you genuinely believe you are the only bidder and are being messed around, this is your only real course of action. The worst thing you can do is bid against yourself.

spaceHopper

In France, the asking price is binding, if you get an offer of the asking you must take it. That would put a stop to a lot of nonsense.

Michael D Not Higgins

spaceHopper wrote: »

In France, the asking price is binding, if you get an offer of the asking you must take it. That would put a stop to a lot of nonsense.

You'll just end up with the opposite problem, where prices are far in excess of market value and everyone is still expected to guess what price the vendor will accept.

qrx

spaceHopper wrote: »

In France, the asking price is binding, if you get an offer of the asking you must take it. That would put a stop to a lot of nonsense.

Similarly in the USA, if the EA gets you an offer that is considered reasonable and you refuse they can charge you their fee and terminate the contract. Of course you can negotiate this out of the contract when signing up with an EA but the point is there is at least something being done about these shenanigans.

1641

qrx wrote: »

Similarly in the USA, if the EA gets you an offer that is considered reasonable and you refuse they can charge you their fee and terminate the contract. Of course you can negotiate this out of the contract when signing up with an EA but the point is there is at least something being done about these shenanigans.

Does this change much really? Take a house listed here for €350k that eventually sells for, say, €400k after bidding stops. If we had the US rules you describe, I could instruct the EA to offer the same house for sale at €450k. Buyers would similarly adjust to the new rules and kick off bidding around €350k.The house eventually sells for €400k - As before, what the highest willing buyer was prepared to pay. Or am I missing something?

davo10

qrx wrote: »

It's not some hair brained idea, it's how it works Scotland. You also carry out inspections etc prior to bidding, you are not taking a wild guess at the properties value, rather it is an informed bid based on the advice of professionals. Of course what you can afford and what you are willing to pay is also a factor in the equation, so if you bid 30K more it's because that's what you can afford and are willing to pay. so the market still dictates, just in a more formal and professional way.

And if the vendor declines? How is that any better than the current system? Surely you are not implying that the vendor must accept what you the buyer believes the property to be worth?

I'm struggling to see how any alternative bidding methods make any difference to the fact that a vendor is not compelled to sell to any bidder, and the highest bid usually gets the property.

Sarn

qrx wrote: »

What about the Scottish approach? All interested parties submit their best and final offer. Bids are sealed so you cannot "up" your competitors.

This has happened on a couple of properties we went for. It is something that we are trying to avoid as we don't want to significantly overpay.

1641

Sarn wrote: »

This has happened on a couple of properties we went for. It is something that we are trying to avoid as we don't want to significantly overpay.

I have heard of it happening here in the latter stages of a sales process.It seems to have been there were 2-3 bidders, each slowly and marginally upping the ante on each other. At least they all presumably knew where the ballpark was at that stage. Still must be difficult to make the call though.

Is it happening more widely than this, Sarn?

wordofwarning

A lot of people don't seem to realise estate agents are now regulated. They have to keep extensive records of bids, etc. They are randomly audited by the PRSA to make sure everything is kosher. You can ask for a case of phantom bids to be investigated. An estate agent can lose their license ie their livelihood if they are not paying by the rulebook.

I was speaking to an estate agent who listed a property at 700k. Bidding starting at 600k and closed at 730k. Im sure most of the bidders were screaming phantom bidders and Im sure they will be until they see 730k on the PPR.

Sarn

1641 wrote: »

I have heard of it happening here in the latter stages of a sales process.It seems to have been there were 2-3 bidders, each slowly and marginally upping the ante on each other. At least they all presumably knew where the ballpark was at that stage. Still must be difficult to make the call though.

Is it happening more widely than this, Sarn?

I only know of three, but that was from a small sample size. In all cases it was towards the end of the process when there was a feeling that it was coming to the end. It's one way to squeeze a bit more out of the bidders.

qrx

davo10 wrote: »

And if the vendor declines? How is that any better than the current system? Surely you are not implying that the vendor must accept what you the buyer believes the property to be worth?

I'm struggling to see how any alternative bidding methods make any difference to the fact that a vendor is not compelled to sell to any bidder, and the highest bid usually gets the property.

They have to outright reject your offer. What we have here is they hang onto your offer and use it as leverage to inflate any further bids. Also everything is via solicitors, there are laws governing the whole process.

And the seller does not accept what the buyer says the price is. The seller sets an asking price and unlike here the asking price is exactly what it says. Only bids on or in excess will be considered.

davo10

qrx wrote: »

They have to outright reject your offer. What we have here is they hang onto your offer and use it as leverage to inflate any further bids. Also everything is via solicitors, there are laws governing the whole process.

And the seller does not accept what the buyer says the price is. The seller sets an asking price and unlike here the asking price is exactly what it says. Only bids on or in excess will be considered.

So what you seem to be saying is bids below the asking price will not be considered and bids at/above the asking price must be accepted? Surely not, that would be restricting property prices, no developer would ever build a house without setting a sky high price, no house seller would put their house on the market without doing the same. If anything, given the demand, prices would increase the same way rents increased in anticipation of rent restrictions.

qrx

davo10 wrote: »

So what you seem to be saying is bids below the asking price will not be considered and bids at/above the asking price must be accepted? Surely not, that would be restricting property prices, no developer would ever build a house without setting a sky high price, no house seller would put their house on the market without doing the same. If anything, given the demand, prices would increase the same way rents increased in anticipation of rent restrictions.

No you don't have to accept a bid.

If you put the asking price too high and you don't get any bids you'll need to lower it. It doesn't mean buyers have no choice but to put inflated offers.

1641

qrx wrote: »

No you don't have to accept a bid.

If you put the asking price too high and you don't get any bids you'll need to lower it. It doesn't mean buyers have no choice but to put inflated offers.

qrx, I found this on the Scottish citizen's advice website re: selling a house. Is this your understanding of the process also?
If you are using a selling agent you should discuss the price you want for the property with the estate agent or solicitor handling the sale. You may advertise the property at a price described as ‘Offers over...’ which often means that you want no less than that price but ideally more. A property can be advertised at a ‘Fixed price’ which means that the first offer of that amount should secure the sale although, in some circumstances, a seller may accept less than the fixed price. When the property is small, and attractive to first time buyers, it may be important to set a realistic price as they may only be able to borrow what a surveyor says the property is worth.
It is important to discuss the situation with the selling agent as there may be different tactics on price to consider because of the type of property for sale.


https://www.citizensadvice.org.uk/scotland/housing/buying-and-selling-s/selling-a-home-s/

frankythefish

My name is ralf. I want to sell house. I m going to get my distant cousin but good friend jacksy to put bids on my house to push Mr honest who wishes to buy house north and north on a purchase price.

Point being you ll never really know if you ve been played. Set a max and stick to it.

qrx

1641 wrote: »

qrx, I found this on the Scottish citizen's advice website re: selling a house. Is this your understanding of the process also?
If you are using a selling agent you should discuss the price you want for the property with the estate agent or solicitor handling the sale. You may advertise the property at a price described as ‘Offers over...’ which often means that you want no less than that price but ideally more. A property can be advertised at a ‘Fixed price’ which means that the first offer of that amount should secure the sale although, in some circumstances, a seller may accept less than the fixed price. When the property is small, and attractive to first time buyers, it may be important to set a realistic price as they may only be able to borrow what a surveyor says the property is worth.
It is important to discuss the situation with the selling agent as there may be different tactics on price to consider because of the type of property for sale.


https://www.citizensadvice.org.uk/scotland/housing/buying-and-selling-s/selling-a-home-s/

I was not aware of the fixed price securing a sale. But yes I'm not going to disagree with the citizens advice bureau.

Michael D Not Higgins

Being in Scotland, fixed price properties are few and far between. Usually it's only new builds with fixed price.

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wordofwarning

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Eh? A dodgy EA engaging in phantom bids can lose their business. But it does not make a difference?

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So the state needs to do more to regulate the industry, as some people can't be bothered to make a basic complaint to a regulatory body? That makes no sense at all. If the laws and procedures are in place to prevent phantom bids already. What more do you want the state to do?

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EAs want to get existing properties off their books ASAP. You will make a lot more selling another house than squeezing an extra €2k out of an existing one. Most EAs want to see mortgage approval before bids. Want bids in email or writing etc. EAs don't want to be messed around with tire kickers. They have little to benefit from it

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Who will be in his /her records and easily identifiable for the PRSA to penalise them for their actions. Plus the sellers will want to know who these interested parties are...

All of these examples you have given make little sense in reality.

Michael D Not Higgins

I don't see there being a transparent way to do bidding unless there's an impartial intermediary. The very fact that the estate agent is working for the vendor will always throw suspicion on some element or another if the bidder feels hard done by.

mloc123

I am not sure what the expected outcome of all these changes would be. Currently people are paying the prices, it doesn't matter how they get to that price... somebody is willing to pay it. While there are people willing to pay what some people consider 'over the odds' for a house... they will sell for that.

Set a price in your head that you value a house at... don't get pissed off if somebody else values it higher and are willing to pay it.

qrx

mloc123 wrote: »

I am not sure what the expected outcome of all these changes would be. Currently people are paying the prices, it doesn't matter how they get to that price... somebody is willing to pay it. While there are people willing to pay what some people consider 'over the odds' for a house... they will sell for that.

Set a price in your head that you value a house at... don't get pissed off if somebody else values it higher and are willing to pay it.

The problem is you can bid on a house and have no intentions of actually going through with it. Especially as an estate agent will tell you the only way to stay in the loop and keep informed is to put a bid in. So I could have some airy fairy plan to move next year or whenever and be looking around at houses to see what the story is and sticking bids in just to keep informed. Or I might have got mortgage approval on an online calculator and have plucked a value for my home out of thin air and go around sticking bids in.

This is happening. Suits the vendors, suits the estate agents. EA will be fairly clued in as to who is a genuine bidder but will take your bid regardless because it pushes the bar up a notch for anyone coming after.